In this review, we will consider the Russian market of beauty and health products, its role and place in the world market, state and trends. The focus will be on decorative cosmetics and care products.

World market: main trends

The global market for cosmetics and personal care products is growing and will only increase in the coming years. Global sales of products in the cosmetics and cosmetology segment, as well as personal care, according to the analytical company Euromonitor International, grew by 5% in 2014. Industry sales were $465 billion last year.

According to the almost century-old tradition, the undisputed leaders among manufacturers are transnational companies, which account for the majority of all manufactured products. The largest market for cosmetics is the US, followed by Europe. Recently, new and emerging markets for cosmetics have become increasingly active. For example, the world's largest manufacturer L'Oreal already sends more than 40% of its goods outside the Old and New Worlds. The BRIC countries are gaining more and more weight in the international arena today, the total share of which is approaching 25%.

Natural "organics" - a new word in the market of cosmetics. Every year the popularity of such a direction as organic natural products is growing. Their main "trump cards": the almost complete absence of harmful elements and a low level of allergenicity. According to forecasts, by 2018 the demand for such products may reach more than $13.0 billion. How actively this segment will develop depends directly on the growth in the well-being of the planet's inhabitants.

Cosmeceuticals. Another noticeable trend of recent years is that customers are increasingly interested in the versatility of the product, which contributed to the development of such a direction as cosmeceuticals. This group includes products that combine the properties of both medical and aesthetic nature. With the help of cosmeceuticals, you can treat hair loss, skin pigmentation, acne, eliminate the symptoms of natural aging, etc. In particular, injectable fillers that smooth wrinkles are in great demand. In addition to the preparations themselves, this category also includes various ultrasound and laser devices. This direction is one of the most promising today.

Sales and promotion on the Internet. The cosmetics market keeps pace with the times - large manufacturers can no longer afford to ignore the worldwide network. This is not only about banal online stores, but also about various strategies for promoting brands online.

The Internet is gaining more and more weight as the most dynamically growing sales channel for cosmetics: Estée Lauder in the annual report 2014 specifically emphasized the role of web-based promotion and sales channels. Thus, the opening of its representative office on the Tmall resource, the largest online retailer in China, allowed the group to double the total sales volume in the region. The group's immediate plans to expand online sales also include the Middle East, Turkey and Russia.

Nyx Cosmetics was the first cosmetic manufacturer and retailer to launch a commercially active Facebook page, allowing its US audience to make purchases without leaving the brand's official social network presence.

This is a new level of synergy between the corporate website, payment systems and Facebook. The company expects, first of all, to promote discount programs and carry out promotions in this way.

The American retail giant Ulta already sells 5% of the total volume ($37.3 million in 2014) on its portal. The goal for the next 5 years is to bring the online share to 10%, for which the company is adopting new electronic marketing - video technology that allows you to place an order on the site right while watching, the so-called Shoppable Video.

In Eastern Europe, the region where electronic sales of cosmetics are developing best is Poland, according to analysts. According to the Center for Retail Research, sales growth in this country in 2015 will be 24%, well ahead of the European average of 16%. One of the drivers of growth in this area in Poland was the EU investment of 390 million euros between 2009 and 2011, when most of the web stores that are “shooting” today were created.

Latest forecasts. In the first half of 2015, Euromonitor International analysts made market development forecasts until 2019. According to their data, the skin care business will remain the largest, and by 2019 it will account for a third of the total sales in the industry (between 2009 and 2014 it accounted for about 23%). The Asian markets, as before, will be the main driver of the growth of the "leather" segment, 80% of the revenue in this area by 2019 will come from the Asia-Pacific region and Southeast Asia.

China and Brazil are the most promising markets, with absolute growth expected to exceed $10 billion by 2019. Good results are expected in Indonesia and India, as well as the USA, Argentina, Iran, Mexico, Thailand and Turkey.

The market will change not only in terms of its volume and regional distribution, but also due to the diversification of products and technologies for the production of innovative products - it is expected that the skin care segment will become a kind of springboard for the introduction of a huge number of revolutionary new products for the entire cosmetology segment.

Russian market of cosmetics

According to RBC.research, Russia accounts for about 3% of the global turnover of goods from this segment with a volume of about $14 billion (2014). The domestic market of cosmetics today is the fourth largest in Europe, second only to the British, Germans and French. The industry is dominated by imports, which account for approximately 70% of production.

Among the countries of Eastern Europe, the Russian market of cosmetics and personal care products is the largest. According to the consulting company Euromonitor International, in 2013 the total volume of the Eastern European market was $29.6 billion, Russia occupied a 49% share in it.

Over the past years, the sector has been constantly growing due to the improvement in the well-being of the population, an increase in the number of points of sale, specialized stores and specialized retail chains. In addition, the demographic factor also affected - 45.6 million of more than 140 million people are women aged 20 to 60 years (the active age of using cosmetics).

According to BusinesStat, from 2009 to 2013, the volume of demand for cosmetics in Russia increased by 46% and amounted to almost 4 billion units in 2013. In 2009, during the crisis, consumers often refrained from buying beauty products in their usual volumes, therefore, during this period, the minimum five-year value of demand was recorded. In 2010, demand began to pick up and by the end of 2011 had surpassed pre-crisis levels: consumers were finally able to afford spending money on non-essential items. Retail also began to develop. In 2013 alone, the number of specialized stores in the cosmetics and perfumery market increased by 27%. At the moment, there are more than 200 large retail chains in the Russian Federation, including the drogerie format.

The promotion of health stimulates the demand for natural and organic cosmetics, so many stores, including specialized ones, are also opening in this segment.

The leaders of the Russian "branch" of the global industry continue to be well-known brands represented by foreign manufacturers. The top three - Procter & Gamble, L "Oreal, Unilever Group - account for about 30% of the market in monetary terms.

A feature of the sale of goods in recent years has been a decrease in the share of direct sales. Experts explain this not only by the expansion of networks, but also by a significant outflow of consultants, who find it more profitable to work in other areas of the economy. Increasingly, there is competition between the main players of the federal level, the growth of drogerie networks and the sale of products via the Internet, which is rapidly gaining momentum.

There is a decrease in the geographical concentration of the cosmetics and perfumery market around Moscow and St. Petersburg, as it was until recently. The absolute leader among large networks has become "L" Etoile, which has more than 800 stores in the largest cities of the country. This network also owns its own brand of the same name. Almost every large network has opened new stores and is purposefully expanding in the regions. The company plans - bringing the number of stores to 1000.

In the direct sales segment, Avon remains the leader.

Russian manufacturers are not yet able to compete on equal terms with foreign ones, although many of them have achieved high fame and sales growth, especially in the personal care subcategory.

French perfume manufacturers are still leading the market, but at the end of the 20th century they already had to reckon with manufacturers in the UK, the USA and Germany.

From 1965 to 1972, the Americans, no doubt, vigorously pressed the French in the space where the latter considered themselves inaccessible. At the cost of huge investments in advertising, in-depth study of marketing, using commercial aggressiveness without complexes, as well as skillful use of French production technologies or simply attracting French "smelters" to give a "French touch" to perfumes conceived for the European market, the Americans managed to establish themselves in the European market. and achieve international recognition.

Such an attack undoubtedly aroused French national pride and hastened the necessary changes in the commercial field.

In the 80s, when the large concerns "Procter and Gamble", "Unilever", "L" Ore "al" and "Sanofi" systematically absorbed many small cosmetic companies and almost exclusively established themselves in the mass cosmetics market, first of all, the methods of marketing of new products.

Procter and Gamble and Unilever decided that the tried-and-tested aggressive marketing of margarine and laundry detergents was just as suitable for perfume. It seems that "L" Oreal "shared this point of view.

Today, even a modest advertising campaign for a perfume, according to Ron Latham, head of advertising at Unilever Parfum, costs at least $20 million. However, the market is a category that is both predictable and unpredictable. The cost of risk today is calculated in astronomical amounts.

As you know, the modern buyer is capricious. Once he was devoted exclusively to "his" brand. Today, more and more inclined to experiment. This leads to the fact that in the first few months new items are sold briskly, then the demand quickly fades away.

The victims of this were, for example, Gio (VOreal, 1992), Sun Moon and Stars by Karl Lagerfeld (1994), Escape by Calvin Kline (1992). Thus, the following situation has developed in the markets of Western Europe and North America. The production of perfumery has become dominated by monopolies that do not like to bother with the flexibility of marketing moves. Their main landmark is powerful production, products designed for the mass buyer, and aggressive, but unpretentious advertising, designed for the mass mentality.

It is much more profitable and easier than investing in the production and marketing of exclusive products. Recognized leaders in the production of prestigious cosmetics - Estee Lauder and Revlon - could not resist such a temptation. With the support of the powerful financial companies of Wall Street, they are actively trying to infiltrate their products into the mass market, which is growing faster than the prestigious one today. At the same time, large perfumery and cosmetic concerns seek not only to earn money, but also to "save face". They called the mass market the market of the future, the dignity of which is in the abundance of high-quality goods for every taste and budget.

To establish itself in the market, any manufacturer today must act according to the laws of marketing and profitability for the medium or long term, if, in spite of everything, perfumery is primarily an artistic and creative craft and profession. However, the two concepts are not mutually exclusive.

It is clear that some interesting creations can go unnoticed without being supported by targeted and active advertising. If Dior, Erme, Chanel, Guerlain or Lanvin have already won strong sympathy, then other, less famous names are forced to resort to immoderate advertising in order to take their place and not remain in the shadow of the great.

True, in some cases, when releasing perfumes, they tend to rely more on a sonorous name than to create an original composition, an example of this is a perfume with a celebrity name that is widely exploited by the media as the main one in the presented fragrance e-perfume released by Niki de Saint Phalle, Bridget Bardot, Alain Delon.

However, each new generation of buyers discovers Chanel No. 5, L "Air du Temps or Shalimar. The last one makes 30% of Guerlain House's revenue.

What is a good perfume? Those perfumes that are sold! This is a joke, of course, but, like every joke, there is some truth in it.

When the harmony of fragrance, bottle, packaging, name, brand and successful advertising style is established, a mysterious phenomenon occurs that leads to the commercial success of perfumes.

Creative intuition + marketing + competition + advertising = success? These conditions are in any case necessary, but sometimes insufficient, if we take into account some subtle facts ...

In France alone, more than 100 new perfumes were released in a year. How to believe that there is a place for everyone? Natural selection is very strong and the luckiest flavors survive or are more armed to hold out in the fight.

According to manufacturers, there are more and more consumers who are no longer "faithful" to the same fragrance. But manufacturers also admit that they themselves have contributed to the destruction of one brand loyalty by producing ever shorter cycles that create a "snowball" effect.

The debate remains open: some argue that a well-organized supply is enough to determine demand, even orient it. Others answer that a woman today prefers variety. And to establish yourself in the empire of diversity, you need to have the means. It is clear that only "very large" companies can take on the burden of large investments to organize spectacular advertising, pay the costs of the media, and release samples. This presumably explains why some firms today make agreements with large multinational firms. So, Caron is a subsidiary of the American pharmaceutical group A. N. Robins. Givenchy reports to Vew Cliquos, while Saint Laurent is supported by Charles of the Ritz.

The expansion of the perfumery market leads to the spread of representative offices of firms around the world, the opening of new stores. Firm Yves Rocher has 1350 beauty centers scattered around the world. To make their products more accessible, firms are selling at home, producing and distributing huge numbers of trial copies, not to mention powerful advertising through the media.

The marketing research of the perfumery market reflects the market conditions prevailing in 2014-1 quarter. 2015

The report analyzes the competitive environment in the perfumery market. Based on a retrospective analysis of the development of the perfume market, trends in the development of consumer sectors and expert survey data, a forecast was made for the development of the perfume market until 2020.

Brief conclusions

Research Methodology

Description and classification

Section I. Perfume market: supply and demand

1. Characteristics of the Russian perfumery market in 2008-1 quarter. 2015 Forecast for 2015-2020

1.1. The volume and dynamics of the perfumery market in 2008-1 sq. 2015 Forecast for 2015-2020

1.2. The structure of the perfumery market (production, import, export, aggregate supply) in 2008-1 quarter. 2015 Forecast for 2015-2020

1.3. The volume and structure of the perfumery market by type/segment in 2010-1 sq. 2015 Forecast for 2015-2020

1.4. characteristics of competition in the market. Market shares of leading players

1.5. Significant events

1.6. Characteristics of the Russian cologne market in 2010-1 quarter 2015 Forecast for 2015-2020

1.6.1. The volume and dynamics of the Russian market of colognes in 2010-1 quarter. 2015 Forecast for 2015-2020

1.6.2. Cologne market structure (production, import, export, supply in 2010-Q1 2015. Forecast for 2015-2020

1.6.3. Key players, their volumes and shares

1.7. Characteristics of the Russian market of deodorants in 2010-1 quarter. 2015 Forecast for 2015-2020

1.7.1. The volume and dynamics of the Russian market of deodorants in 2010-1 quarter. 2015 Forecast for 2015-2020

1.7.2. Deodorant market structure (production, import, export, supply in 2010-Q1 2015. Forecast for 2015-2020

1.7.3. Key players, their volumes and shares

1.8. Characteristics of the Russian market of toilet and fragrant waters in 2010-1 quarter. 2015 Forecast for 2015-2020

1.8.1. The volume and dynamics of the Russian market of toilet and fragrant waters in 2010-1 sq. 2015 Forecast for 2015-2020

1.8.2. Structure of the toilet and fragrant water market (production, import, export, supply in 2010-1 quarter of 2015. Forecast for 2015-2020

1.8.3. Key players, their volumes and shares

1.9. Characteristics of the Russian perfume market in 2010-1 quarter. 2015 Forecast for 2015-2020

1.9.1. The volume and dynamics of the Russian perfume market in 2010-1 sq. 2015 Forecast for 2015-2020

1.9.2. Perfume market structure (production, import, export, supply in 2010-Q1 2015. Forecast for 2015-2020

1.9.3. Key players, their volumes and shares

2. Characteristics of perfumery consumption in 2008-1 quarter. 2015 Forecast for 2015-2020

2.1. The volume and dynamics of shipment of perfumery by Russian manufacturers in 2008-1 quarter. 2015

2.2. The volume and dynamics of consumption in 2008-1 quarter. 2015 Forecast for 2015-2020

2.3. The volume and dynamics of consumption by types and segments in 2010-1 sq. 2015

2.4. Balance of supply and demand

Section II. Perfume market: characteristics of domestic production in 2008-1 quarter. 2015 Characteristics of key manufacturers

1. Characteristics of the domestic production of perfumes in 2005-1 quarter. 2015

1.1. Characteristics of the domestic production of perfumery

1.1.1. Main manufacturers, their shares and production volumes

1.1.2. Volume and dynamics of production

1.1.3. Structure of production by regions of the Russian Federation

1.2. Characteristics of domestic production of colognes

1.2.1. Main manufacturers, their shares and production volumes

1.2.2. Volume and dynamics of production

1.2.3. Structure of production by regions of the Russian Federation

1.3. Characteristics of the domestic production of deodorants

1.3.1. Main manufacturers, their shares and production volumes

1.3.2. Volume and dynamics of production

1.3.3. Structure of production by regions of the Russian Federation

1.4. Characteristics of the domestic production of toilet and fragrant waters

1.4.1. Main manufacturers, their shares and production volumes

1.4.2. Volume and dynamics of production

1.4.3. Structure of production by regions of the Russian Federation

1.5. Characteristics of domestic perfume production

1.5.1. Main manufacturers, their shares and production volumes

1.5.2. Volume and dynamics of production

1.5.3. Structure of production by regions of the Russian Federation

1.6. Average annual capacity and level of its utilization

2. Characteristics of key manufacturers

Section III. Perfume Market: Factors Affecting Development

1. Macroeconomic factors

1.1. General economic situation in the Russian Federation

1.2. The level of well-being of the population

2. Industry factors, development of related and consuming industries, substitute goods

Section IV. Perfume market: characteristics of foreign trade operations in 2008-1 quarter. 2015

1. Volume and structure of imports and exports of perfumery by types

2. Characteristics of imports of perfumes to the Russian market in 2012-1 quarter. 2015

2.1. Characteristics of imports from the CU countries (Belarus and Kazakhstan)

2.2. The volume and dynamics of imports in 2008-1 quarter. 2015

2.3. Producing countries, leading supplies to the territory of the Russian Federation

2.4. The volume and structure of imports by manufacturing companies

2.5. Volume and structure of imports by brands

2.6. The volume and structure of imports by recipient companies

2.7. The volume and structure of imports by regions of the Russian Federation

3. Characteristics of imports of deodorants in 2008-1 quarter. 2015

3.1. The volume and dynamics of imports in 2008-1 quarter. 2015

3.2. Producing countries, leading supplies to the territory of the Russian Federation

3.3. The volume and structure of imports by manufacturing companies

3.4. Volume and structure of imports by brands

3.5. The volume and structure of imports by recipient companies

3.6. The volume and structure of imports by regions of the Russian Federation

4. Characteristics of imports of colognes in 2008-1 quarter. 2015

4.1. The volume and dynamics of imports in 2008-1 quarter. 2015

4.2. Producing countries, leading supplies to the territory of the Russian Federation

4.3. The volume and structure of imports by manufacturing companies

4.4. Volume and structure of imports by brands

4.5. The volume and structure of imports by recipient companies

4.6. The volume and structure of imports by regions of the Russian Federation

5. Characteristics of imports of perfumes in 2008-1 quarter. 2015

5.1. The volume and dynamics of imports in 2008-1 quarter. 2015

5.2. Producing countries, leading supplies to the territory of the Russian Federation

5.3. The volume and structure of imports by manufacturing companies

5.4. Volume and structure of imports by brands

5.5. The volume and structure of imports by recipient companies

5.6. The volume and structure of imports by regions of the Russian Federation

6. Characteristics of imports of toilet and fragrant waters in 2008-1 quarter. 2015

6.1. The volume and dynamics of imports in 2008-1 quarter. 2015

6.2. Producing countries, leading supplies to the territory of the Russian Federation

6.3. The volume and structure of imports by manufacturing companies

6.4. Volume and structure of imports by brands

6.5. The volume and structure of imports by recipient companies

6.6. The volume and structure of imports by regions of the Russian Federation

7. Characteristics of Russian exports of perfumery in 2012-1 quarter. 2015

7.1. Characteristics of Russian exports to the CU countries (Belarus and Kazakhstan)

7.2. The volume and dynamics of exports in 2008-1 quarter. 2015

7.3. Recipient countries of Russian exports

7.4. Manufacturing companies supplying perfumes for export

7.5. Foreign recipients of Russian exports

7.6. Regions of departure of Russian exports

Section V. Perfumery Market: Characteristics of Prices. Average producer, import and export prices

1. Average producer prices in 2010-1 sq. 2015

2. Average contract prices for imports and exports

Section VI. Perfume market: results and conclusions

Annex 1. Profiles of leading manufacturers

Annex 2. Financial and economic indicators of the industry

Information about the perfumery market

Domestic production of colognes in January-June 2013 increased by 6% compared to the same period in 2012.

Figure 1. Perfume market: production volume and dynamics

Perfume imports in 2012 increased by 11% compared to 2011. The increase in imports in value terms amounted to 8% compared to 2011.

Among the key supplier countries, leading perfumery imports to the Russian market in 2012 (in physical terms), the largest share fell on France (41.7%). The share of Poland was 13.8%, Sweden accounted for 7.3%, about 6% fell on Spain.

Figure 2. Perfume market: structure of imports by countries of origin in physical terms

In value terms, France accounted for the largest share in 2012, with a share of 57.2%. The UK share was 8.7%, Italy accounted for 6.9%, Poland's share was 5.6%.

Figure 3. Perfume market: structure of imports by country of origin in value terms

Product groups/segments:

• deodorants
• colognes
• perfume
• toilet and fragrant waters

Perfume is a mixture of essential oils and aromatic compounds with water and/or alcohol that is used to improve body odour. The perfume industry has offered consumers a significant number of innovative products over the past few years. The use of natural and renewable ingredients has led to new popular perfumes. Apart from traditional packaging methods, perfumes are now available in travel sprays and balls, which is expected to drive the growth of the global perfume market during the forecast period. The global perfume market is valued at $39.67 billion at the end of 2016 and is expected to grow at a CAGR of 5.9% over the forecast period (2016-2026).

Increasing Millennial Perfume Demand Likely Drives Market Growth

Increased use of perfumes among the younger population, increased retail penetration, product promotion strategies from key global players, availability of perfumes in different price ranges, and increased consumer spending on personal and beauty care products are the main factors that are expected to will lead to the growth of the global perfume market during the forecast period. However, the presence of counterfeit products and the use of harmful chemical ingredients are among the factors that are expected to hinder the growth of the global perfume market during the forecast period.

The global perfume market is witnessing a growing trend towards personalized perfumes and the use of renewable ingredients in the production of perfumes. Global perfume manufacturers have also delved into the production of microbial perfumes based on natural ingredients to meet the growing health awareness among consumers.

Market segmentation

The Refreshing Water Product Type segment is expected to show the largest growth during the forecast period

Refreshing Water segment revenue is expected to show a significant CAGR during the forecast period, which is mainly due to the absence of alcohol in this type of perfume. The latest trend among key players in the perfume industry is to create Refreshing Water versions of their popular fragrances. The Eau de Parfum segment is estimated to account for the largest market value and a 52.0% share at the end of 2016.

The demographic segment of Unisex Perfume is expected to show strong growth during the forecast period.

The Men's Perfume segment is forecast to post a CAGR of 6.9% over the forecast period. Rising fragrance product launches by major players and increased sales in Asia Pacific (excluding Japan) are expected to drive the market in this segment. The Men's Perfume segment is estimated to account for 34.9% of the market at the end of 2016 and is also expected to post strong CAGR due to increased consumption of male-targeted beauty products.

The Internet Retail Distribution Channel segment is expected to show a significant CAGR over the forecast period

The online retail segment is expected to post a CAGR of 7.0% over the forecast period and is expected to be the most attractive segment in terms of CAGR. Global players are partnering with e-commerce players to capitalize on this highly lucrative sales channel. The physical retail segment is estimated to have the largest market share at the end of 2016 and will continue to dominate the global perfume market during the forecast period.

The Natural Ingredients Perfume segment will experience higher growth rates during the forecast period

The natural segment is estimated to account for 18.9% of the market at the end of 2016 and is expected to post a CAGR of 7.9% over the forecast period. Growing consumer concerns about the use of synthetic chemicals in perfumes are driving perfume manufacturers to shift from synthetic to natural ingredients, which in turn is fueling the growth of the natural segment.

Perfume markets in the Middle East, Latin America and Eastern Europe will expand significantly in terms of value and sales volume

In value terms, the Western European market accounts for the largest share of the global perfume market, followed by North America. The Western European perfume market is expected to show a CAGR of 3.2% over the forecast period. The Asia Pacific perfume market, excluding Japan, is expected to register a significant CAGR of 10.2% over the forecast period, due to the expansion of the leading market players in the region.

Leading market players are implementing digital marketing strategies to reach a wider customer base

Estee Lauder Companies Inc., LVMH, Coty Inc., L "Oreal International, Elizabeth Arden Inc., Shiseido Co. Ltd., Puig, Perfumania Holdings Inc., Avon Products Inc., and Hermes are among the leading companies working on The global perfumery market The beauty and personal care industry has undergone major changes over the past decade, creating a future perspective for the perfume business for entrepreneurs Major players in the perfume industry are strategically investing in expansion in the Middle East, Africa and Latin America, where perfume consumption per capita population is high.

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Global Cosmetics Market 2016: Industry Analysis and Opportunity Assessment

2016 has been a busy year for the beauty industry, not only in terms of cosmetic innovations, but also in terms of the market situation. Improved distribution channels, new approaches to promoting their brands, incredible strategies for the absorption or merger of cosmetic giants with independent brands - all these and many other factors have ensured stable development of the global market.

If in 2015 it was estimated at about 203 billion euros, then in 2016 an increase of 4% was achieved, respectively, the volume globally exceeded 211 billion euros. Since 2013, this financial indicator is the largest. The beauty industry is generating record revenues, with segments such as men's skincare and natural/organic products rapidly gaining market share, while social media, modern consumer's eco-consciousness, and buying behavior factors have a significant impact on purchase decisions. products. 2016 showed that in the future the situation on the market will be extremely changeable, to which manufacturers will have to adapt.

Main trends in the global cosmetics market

Since the beginning of the twentieth century, the production of cosmetics has been controlled by several international corporations. The global cosmetics industry is broken down into six major categories: skincare, haircare, color, fragrance, personal care and deodorant, and oral care.

Over the past five years, there has been a clear trend that the skin care sector has been steadily increasing its volume. In particular, in 2016, skin care products represent the largest category of all, accounting for 36.4% of the global market.

Global cosmetics market 2011-2016 by product category. Source: statista.com

As for other segments, their indicators of presence in the global market are as follows:

cosmetics for hair care - 22.9%;
decorative cosmetics - 18.2;
perfumery - 10.5%;
personal hygiene items and deodorants - 12%;
oral care products - less than 0.5%.

Over the past year, consumers have spent more of their income on cosmetics than in 2015. Unfortunately, the global financial crisis has changed the direction of the cosmetics market, so over the past few years, consumers have preferred more affordable products, and also tried to prepare certain products at home. conditions, such as creams and face masks.

However, when Generation Y, who were born between 1981-2004, also known as Millennials, entered the labor market en masse, it was a big boost to the cosmetics market around the world, especially in the United States. To date, the US is the largest cosmetics market with an estimated total revenue of approximately US$62.46 billion. In the coming years, global cosmetics companies will continue to focus their efforts on innovative products to attract new consumers and retain loyal existing consumers.

As consumers become increasingly wary of the potential toxicity of cosmetics, market segments offering harmless products made with natural ingredients and essential oils are experiencing unprecedented growth. The leading companies in the global cosmetics market are L "Oréal, Estée Lauder and Beiersdorf.

Geographic features of the global cosmetic market

Companies operating in the global cosmetics market must compete for shelf space in retail outlets, not only with competing organizations offering other well-known brands, but also with cheaper copycats that bring similar unbranded products to the market.

Non-Western beauty cultures are becoming more and more influential. Consumers outside of North America and Europe are remaking the cosmetics industry in their own image. As a result of this transition to new regional beauty cultures, which are very different from the developed European and North American ones, new products, trends and technologies will emerge. A vivid example of such a process is the so-called “Korean phenomenon”. Ethnic and cultural diversity shape consumer beauty rituals and product priorities. In addition, ethno-cultural differences and product diversity have become the norm in the global cosmetics market.

Geographically dominated by the Asia-Pacific region and North America, they account for over 60% of the beauty industry market.

Geographical areas of the global cosmetics market from 2011 to 2016. Source: statista.com

The Asia-Pacific region has strengthened its position in the global market by 0.7% since 2015 (36.2%), which was 36.9% in 2016. North America achieved the same results - from 24% to 24.7%.

Western European countries showed a decline - from 20.2% in 2015 to 19.3% in 2016. But Eastern Europe showed some stability - 6% over the past two years. The positions of Latin American countries also slightly decreased - from 10.5% to 10.2%, as well as Africa and the Middle East - from 3% to 2.9%.

The Russian cosmetics market has maintained its growth dynamics for 7 years in a row

Despite the Russian economic crisis, the beauty industry (cosmetics, make-up, professional beauty treatments) has proven to be resilient to the downturn. The Russian attitude towards cosmetics and the interest of consumers in new products and technologies have provided the cosmetics market with constant streams of profit, which rewards foreign companies that invest their time and resources in the Russian industry.

Since 2015, American brands such as Olaplex, Dr. Stanley Jacobs, Urban Decay, Sundari, LashFood, Carmex, EOS, Earthly Body and many others have entered the Russian market. These companies have established successful partnerships with Russian distribution organizations. The main market segments are perfumes, skin care products (professional and retail), hair care products (professional and retail), make-up products and professional aesthetic treatment products.

Experts estimate that sales of beauty products increased by 5% between 2011 and 2016. And growth of about 1% is expected in the next three years, which means that the number of units sold in 2019 will be about 211 million units. Russians buy health products and cosmetics to improve their overall health and appearance. According to eMarketer.com, more than 50% of Russian online shoppers made online purchases of beauty and personal care products in 2016. Yandex.ru, the leading Russian search engine, processes over 2 million searches per month for the term "cosmetics" and 800,000 for "long-term makeup".

Dynamics of the Russian cosmetics market for 2010-2016. Source: statista.com

According to Euromonitor, Russia's beauty and personal care market was $8.73 billion in 2016, down 2.2% from $8.93 billion in 2015. The skin care segment was the largest at $1.76 billion, perfumes at $1.39 billion, hair care at $1.35 billion; makeup, $1.22 billion; and men's beauty, $1.12 billion.

Deodorants, the second best-selling category, reached $399 million in 2016 with 0% growth. The most unprofitable category in 2016 was hair removal products, whose sales decreased by -5.5% compared to 2015.

Despite the devaluation of the ruble, Russia remains the largest cosmetics market in Eastern Europe and accounts for 50% of the region's retail cosmetics market, according to the Russian Ministry of Industry and Trade. However, domestic financial processes have pushed up the price of imported cosmetics, which, combined with consumers' propensity to save money on non-essential products, has resulted in lower profit margins for major international cosmetics manufacturers. Prices of premium cosmetics rose by about 13%; mass market cosmetics - by 18%; cosmeceuticals - by 20%. In 2016, the price increase was not as dramatic as in 2015.

Infographics "Cosmetic market of Russia in 2015, 2016 by categories: skin care, perfumery, hair care, decorative cosmetics". Source: Euromonitor International.

According to market experts, Russia is entering a new stage and by 2018 the growth of the beauty industry may increase by 6-8%. Experts also expect consumers to return to buying more expensive premium beauty brands starting in 2017.

Market insiders have noticed that switching to cheaper beauty products is a necessity rather than a preferred choice for Russian consumers, who are generally reluctant to switch to lower-priced brands. They may even cut costs in other categories to be able to buy the cosmetics they want. As a rule, Russian buyers prefer not to compromise on the quality of cosmetics. In addition, they are attracted by innovative developments and product packaging. For example, sprays and serums with dosing devices have the highest demand in Russia.

Typical trends in the development of the Russian cosmetics market:
increased demand for cosmetics of the medium and mass markets;
decrease in demand for premium cosmetics;
price increases caused by fluctuations in exchange rates;
growth in sales of professional cosmetics for home use;
the growth of online retail;
small and medium investors become very active.

Domestic manufacturers of cosmetics can compete with foreign manufacturers. However, the market share of imported cosmetics still dominates. Russian manufacturers are trying to expand their positions through lower prices, as well as increased attention to the use of natural ingredients.

Leading domestic brands: Velvet Pens, Black Pearl and Pure Line, as well as Teana, Kleona, GreenLab, Organic Shop, Agafia, Planeta Organica and Green Mama. The Natura Siberica brand specializing in skin and hair care products is one of the strongest in the Russian mass market segment.

Despite the fact that the market is close to saturation, growth points are still available, especially in the regions of Russia. The regional markets of Kazan and Yekaterinburg are smaller in size, but they are also less saturated and more receptive to new products.

The role of online resources in the sale of cosmetics is still one of the most important. In this regard, manufacturers should focus on creating quality online content that will be of interest to consumers both in the planning process and in the direct purchase of cosmetics. This step will attract potential buyers directly to the store, as well as ensure brand loyalty.

The South Korean cosmetics market is one of the top 10 markets in the world

Mintel, a market research company, after studying the South Korean market, came to the conclusion that it is one of the most promising. In particular, at the end of 2016-beginning of 2017, it was estimated at 13 billion US dollars. At the same time, the facial skin care segment accounts for 51% of the total market share, which is 6.8 billion US dollars. Analysts believe that over the next few years, the average annual growth rate will be 5.8%, thus providing $ 7.2 billion in 2020.

Much of the success of the facial skincare category is partly due to the abundance of new product developments and the fact that more than two-thirds (68%) of total skincare products in South Korea in 2015-2016 were facial cosmetics. according to Mintel's Global New Products (GNPD) database.

The South Korean market is developing the fastest

In second place is decorative cosmetics, whose sector is estimated at 2.3 billion US dollars. Mintel research shows that the market is supported by active and engaged consumers. For example, in South Korea, the cost of purchasing makeup products per capita is $45. For comparison, in the UK this figure is 43 dollars, and in the US - 37 dollars. It is noteworthy that at the global level this figure is equal to 21 dollars, thus, South Korea spends twice as much on decorative cosmetics than the rest of the world.

2016 turned out to be a real breakthrough for South Korean cosmetics, which quickly broke into Western markets, offering unique care products, as well as original multifunctional preparations. The trend towards hybrid textures and formats is borrowed from skin care products. South Korean brands are increasingly focusing on gels, mousses and watery oils to enhance consumers' sensory experience. In addition, texture transformation combines the benefits of two or more substances in one product. For example, liquid textures such as cream and oil, which provide high moisture and spreadability, transform into water or serum for quick absorption, or into powder for a matte finish.

The emphasis on quality and safety keeps the craze for natural ingredients in line with ancient Korean herbal medicine. According to Mintel, a long tradition is taken to the next level by scientific advancements, with 69% of skin care products in 2016 being herbal/botanical formulations based on authentic ingredients from South Korea. For example, Jeju Island is a pristine source of natural ingredients, especially green tea, volcanic ash and thermal water.

2016 can safely be called the year of face masks. And this trend is not going to fade. Sheet masks have long gone beyond basic moisturizing properties, they are now designed for every part of the body and every age, including babies, to meet all possible needs and for use in a wide variety of cases, for example, masks with a sauna effect that lock in moisture, retaining body heat.

Dominant trends in the development of the cosmetic market in 2016

Digital technology is transforming the beauty industry

Digital technology has enabled the creation of a new generation of cosmetics stores

Some of the beauty industry's most impressive breakthroughs in 2016 have been the impact of digital technologies, both in shaping retail space and in product development.

First of all, the influence of the Internet on the beauty industry has increased significantly. In particular, video bloggers (vloggers) have made a kind of revolution in the field of cosmetics marketing, presenting on online resources not only product reviews, but also master classes on its use. This trend has been recognized by leading cosmetic companies.

For example, L "Oréal UK took the plunge by entering into an agreement with five video bloggers who work in the cosmetics industry. However, brand websites unexpectedly turned out to be the number one place where consumers hope to receive reliable information, which suggests that in Ultimately, the influence of vloggers may be limited.

Taking full advantage of its online presence, the Lush brand has taken a step to assert its digital influence with the "Access Now" campaign for digital rights, opposing government-ordered internet shutdowns around the world.
2016 is the year when brands increased their retail channels through digital platforms. Estée Lauder has caused quite a stir with a common messaging service, Facebook Messenger, offering 60-minute delivery to consumers across London. Lancome has also invested in online retail, and Urban Decay has digitalized its lipstick collection with the new Tind style app.

Wearable technology is another trend of the past year. Wearable technology combined with mobile app functionality is set to shake up the personal care industry, especially where it can interact with the hugely popular health and wellness promotion trend. For example, the L "Oréal brand was one of the first to release a special patch to determine the degree of skin exposure to ultraviolet radiation.

According to a recent Mintel study, products that are associated with a healthy lifestyle will lead to an increase in the potential of wearable materials. For example, projection technology allows devices to provide skin screening functionality, while microchips combined with wearable devices establish new retail payment options. These devices can also offer a diagnostic feature, which means the technology can choose and buy the most appropriate product, with little or no active involvement from consumers.

Personalization is the dominant trend in the beauty industry

During 2016, it became clear that smaller brands could do better than cosmetic giants in developed regional markets if they provided products that meet the needs of today's consumers. An individual approach, in other words, the personalization of the cosmetic market, is recognized by experts as one of the most important trends in the development of the beauty industry. Consumers prefer a product that meets a certain set of requirements from their lifestyle, skin types and even culture. A clear example of this is the rise in popularity of halal cosmetics, which is not only for Muslim buyers, but also for those who need safe and organic cosmetics.

Personalization through mobile applications is one of the main trends of 2016

It is impossible not to note the connection of this trend with the previous one, because it is the potential of mobile applications that offer personalized solutions that has become the center of innovation in the field of personalization of cosmetics.

For example, Slapp was launched - an application that selects the ideal shades of decorative cosmetics for users. Essentially, it is an e-commerce platform that fuels consumer demand for customized cosmetics and personal care products. Slapp is just one of many apps that have popped up in recent months that allow you to personalize your skincare choices, including OBJ's ConnectBeauty and the recently launched MDacne app.

The undoubted leader in the personalization of its products is Lancome, a decorative cosmetics brand owned by L "Oréal. In 2016, he launched a unique service - Le Teint Particulieur in the USA. This is a device that uses an innovative skin analysis consultation system, which allows it to determine the features of her tone and develop the closest tonal foundation for a particular consumer.The product received a strong positive consumer reaction and appeared in European stores in the spring of 2017.

Aside from color cosmetics, perfumes are another category designed to profit from product personalization. According to research firm Mintel, restoring consumer interest in the market is a key driver of industry growth, and personalized customer service is the most effective way to achieve this. “Personalization should be central to this industry, where purchases are driven by personal aspirations and fragrance preferences,” said Emmanuel Moglin, global beauty and personal care consultant at Mintel.

Retail is getting more innovative

With digital technology playing an increasingly important role in beauty and personal care retail, we take a look at how consumer demand shaped the retail chain in the EMEA region in 2016.

Adapting to rapid market changes, multinational corporations are looking for ways to make their distribution system more dynamic. For example, in September 2016, Amazon Dash was launched in Europe, which allows consumers to place an online order for home-ending items, from wipes and powder to personal care products, at the touch of a button on a special device. With this service you can order the following cosmetic brands: Neutrogena, Gillette, Rimmel, Olay, Listerine. It is noteworthy that Unilever, one of the largest players in the mass market, is not involved in this project.

Sephora is one of the largest companies taking steps to respond to consumers locally. In 2016, the organization invested in a regional center in Poland that uses SAP Automation, a system it plans to expand to other countries in Eastern Europe in the future. This system allows you to optimize the accounting and logistics of the company as much as possible.

A report from research firm Kline singled out Lush and L "Occitane as leaders in the predominant distribution channel - specialized retail in boutiques. This sales direction began to develop in 2015, but by the end of 2016 it became massive, which is confirmed by hundreds of open cosmetic boutiques around the world .

As we wrote earlier, digital mirrors have become one of the major cosmetic innovations of the past year. But their appearance also influenced the format of stores. In particular, such devices use virtual reality to allow consumers to try on cosmetics digitally. No wonder they became the centerpiece of innovative cosmetics retailing in 2016. Charlotte Tilbury, Nyx, Sephora and Credo are investing heavily in this technology while Panasonic takes it to the next level with a mirror that can print matching makeup on the spot.

Travel proved to be another feature in terms of product sales in 2016. So, L "Oréal Marketing Director Vincent Boyna spoke about the huge potential of retail for the beauty industry, because people can get to know certain brands during their trips. For example, Shiseido, another major player promoting retail, launched in Shiseido Travel Retail's new global business unit this year, focusing on duty-free beauty products.

Top 20 cosmetic companies in 2016: achievements and prospects

As we mentioned at the beginning of our review, the global cosmetics market is becoming more and more changeable. One of the features of 2016 was an incredible number of acquisitions and mergers between full-fledged cosmetic giants and independent brands, small brands. This trend suggests that market leaders have chosen a new strategy in order to maintain their position in the beauty industry. In addition, the cosmetics industry is changing at such a speed that sales volumes have become directly dependent on social media and online sales tactics.

Small companies are of interest to large players precisely because of their ability to think freely, in other words, to create and develop unique products, as well as significant experience in using the Internet and social resources (YouTube video blogs, Instagram accounts, etc.) to promote products in new areas of public life.

Over the past year, Estée Lauder Companies (ELC) and L "Oréal, one of the strongest leaders in the beauty industry, have balanced their offerings. In particular, L" Oréal acquired Urban Decay, NYX and IT Cosmetics to fully immerse themselves in the field of independent cosmetics brands, while ELC continued to pursue its “prestigious strategy” by acquiring niche perfume brands, most recently Kilian, which allowed the company to add to the portfolio of brands created back in 2014 with the purchase of Parfums Frédéric Malle, Rodin Olio Lusso and Le Labo . In addition, the management of Estée Lauder is interested in actively attracting a new target group - millennials, which we mentioned at the beginning of the article. To this end, the company turned its attention to Kendall Jenner and Victoria Beckham.

The four largest players have made significant changes to their portfolios. The acquisition of Coty 41 from P&G and the purchase of Revlon by Elizabeth Arden suggest significant changes in the cosmetics market. Not to mention, Avon is selling its North American business and Shiseido Americas is buying Gurwitch Products with Laura Mercier and Revive brands. And Unilever unexpectedly stunned competitors a few months ago by announcing the purchase of Dollar Shave Club for $1 billion, which immediately established the company as a leader in the men's cosmetics market.

L "Oréal - the unchanging leader of the global cosmetics market

It is noteworthy that L "Oréal has managed to take a place in this ranking for two years in a row. One of the secrets of the company's success is to work on innovation and expand its product portfolio. In particular, in January 2016, L" Oréal introduced Beauty's sophisticated hardware and software, when launched a skin sensor called My UV-patch. L "Oréal has entered into a deal with Founders Factory as an exclusive partner for investments in global beauty industry startups. As part of the agreement, partners will invest in five startups at an early stage and jointly create two new companies from scratch. In July, L "Oréal surprised everyone with the acquisition IT Cosmetics brand for US$1.2 billion. With over 300 products and an omnichannel distribution system, the brand is now part of L'Oréal's Luxe Division.

The group's sales for the first half of 2016 hit $14 billion, up 4.2% from expectations, but second-quarter earnings came in below analysts' forecasts. Sales growth during this period was achieved in all categories and geographic areas. Sales of consumer goods increased by 4%, reaching $3.4 billion. Much of this success is due to sales of makeup products, as well as an impressive start with NYX International. During this period, e-commerce sales grew by 33% and accounted for about 6% of total sales.

The recent acquisitions of L "Oréal: NYX, Urban Decay and Niely (Brazil) made a "very positive contribution", while the results of the purchase of Magic and Clarisonic were below expectations. Hair dyes remain the dominant product category in the global market. The care products segment skin received support from Micellar Cleansing Waters from Garnier and Age Perfect Golden Age from L "Oréal Paris. Yves Saint Laurent and Urban Decay continued to promote the Luxe division, while La Roche-Posay was the leading manufacturer in the Active Cosmetics division. Commenting on the half-year data, Chairman and CEO Jean-Paul Agon said: “Our company is at the forefront of the online beauty industry and justifies its leadership in digital technology, especially in cosmetics, in a category that is rapidly accelerating around the world by a generation. millennials."

In addition, L "Oréal has become a recognized leader in another dominant trend in the global beauty industry. Since 2013, the company has been working on the haring Beauty With All program ("Share beauty with everyone"), which provides for a significant reduction in the impact of the organization's industrial facilities on environment. 2016 turned out to be quite successful in this regard: 82% of L "Oréal products improved their environmental and social profile.

Unilever - the cost of success in one billion dollars

The philosophy of Unilever sounds about the same as that of L "Oréal: "Make sustainable development commonplace and the basis of business, accelerate the development of the company, reducing environmental impact and increasing positive social impacts." By 2020, the goal of the multinational company is "to halve the impact on the environment in the production of goods as the business develops.

For the first half of 2016, Unilever sales grew by 5.4% at constant exchange rates and decreased by 2.6% at current exchange rates. Paul Polman, CEO of the company, said: “The results of the first half of 2016 demonstrate the continued progress we have made in transforming Unilever to ensure consistent, competitive, profitable and responsible growth. However, we have been preparing for tougher market conditions in 2016 and still see no signs of improvement in the global economy.”

However, sales of personal care products improved in all subcategories. Deodorants have performed well in the market, with new options for successful dry spray in North America and the introduction of Rexona Antibacterial, which provides 10x odor elimination. The product was introduced in 36 new countries. The Ax line has been expanded to meet the growing demand in the men's market.

The hair care category was supported by the successful re-launch of Sunsilk and TRESemmé Beauty-Full Volume with a reverse conditioning system. Lifebuoy's skincare sector saw strong growth in sales in emerging markets thanks to a handwashing awareness campaign. In addition, the company's surprise acquisition of the Dollar Shave Club brand for $1 billion put Unilever in an immediate position in the men's skin care segment of the global market.

Procter & Gamble is guided by the principle that less is more

P&G shocked the beauty industry with an announcement that it would be downsizing significantly, selling off most of its beauty brands (in summer 2016, P&G sold 43 of its brands, including professional and home-use paint and hair care products, as well as cosmetics and fragrances , Coty) in an effort to become more focused and profitable, as well as increase productivity. P&G Beauty continues to focus on the skincare, personal care and hair care categories and aims to remain the world's leading beauty brand with Olay, SK-II, Head & Shoulders, Pantene, Rejoice, Vidal Sassoon, Herbal Essences, Aussie, Old Spice , Safeguard and Secret.

David Taylor, CEO of the company, is optimistic about the future of Procter & Gamble. “Looking ahead,” he said, “we are committed to continuous productivity improvements and cost savings that provide opportunities for the innovation and investment needed to accelerate and sustain the company's faster growth at the highest level. We expect fiscal 2017 to be another significant step towards achieving our goal of balanced growth.” P&G estimates sales growth of around 1% in fiscal 2017.

Estée Lauder Companies – focus on diverse distribution channels

Over the past year or two, Estée Lauder Companies (ELC) has found its place in the rapidly changing world of beauty, which is now confronted by independent brands, millennial consumers, fierce competition from the premium sector, lower department store sales and global online sales. Strategies include corporate restructuring, a multi-year plan, and bringing in new brands that are younger and more popular on social media. The focus on color cosmetics and the promotion of fragrance products have paid off.

For 2016, ELC announced that it achieved net sales of US$11.3 billion, up 4% from 2015. Fabrizio Freda, President and CEO, said: “Our financial performance in 2016 provides many opportunities to celebrate. We have again provided stable growth. We have capitalized on changing consumer preferences by leveraging our strengths in positioning our company to win in the premium fragrance segment.”

In fiscal 2017, Estée Lauder Companies will actively pursue new opportunities to strengthen its leadership position. It is planned to reorganize the distribution network in the direction of the fastest growing channels while developing medium-sized brands and the latest additions to the portfolio. The Leading Beauty Forward initiative is the foundation for future growth through cost reduction, increased flexibility and investment. For the year ending June 2017, the company expects sales to grow 6% to 7% year-over-year, or about $12 billion, below analysts' average forecast of $12.8 billion.

Colgate-Palmolive and Johnson & Johnson endure tough year

Colgate-Palmolive is trying to stabilize the market during 2017, in other words, achieve what it failed to do last year. Sales continued to decline in the first quarter of 2016. Sales of personal care and oral care products fell 10% to $3.5 billion. However, Colgate-Palmolive is the fifth largest player in the beauty and personal care industry, a legacy of its leadership in oral care. Despite cutting-edge innovations, the company faces pressure from intense specialized competitors. Moreover, its narrow portfolio in the industry as a whole poses risks while missing out on revenue opportunities in other personal care categories. Colgate-Palmolive could deepen its interest in other toiletries, with innovation targeted at dynamic areas, especially dermocosmetics and multi-ethnic beauty.

Although Johnson & Johnson suffered a costly defeat in a landmark legal battle over the cancer-promoting talc in its baby powder, the company achieved a huge coup in June 2016 when it acquired Vogue International for $3.3 billion. The private company has an estimated annual sales of approximately US$300 million. Her field of activity: salon products for hair care, including natural ones, as well as personal care products. This transaction will allow J&J to gain a foothold in the mass market and attract new target groups of consumers. Earlier in 2016, J&J also acquired Dermocosmetics NeoStrata, a brand known for anti-aging technologies and alpha hydroxy acid research.

Shiseido sticks to its Vision 2020 program

After Shiseido posted $6.5 billion in sales in 2014, the decision was made to launch the Vision 2020 program, designed to revitalize a 140+ year old beauty campaign. And given that recent years have not been very successful for the company, the reorganization policy seems perfectly calculated. “Our six-year roadmap to 2020 has two phases,” explained Masahiko Uotani, CEO of Shiseido Group. “The first three-year phase has already begun and we need to rebuild our business foundation so we can grow. During the second three-year phase, we will use this foundation to drive growth. Our targets for 2020 are net sales of over 1 trillion yen (over $8.5 billion) and a return on equity of 12% or more.”

Shiseido's main markets continue to be Japan, China and Asia-Pacific, as well as the Americas and EMEA (Europe, Middle East and Africa). The company said its Japanese market is growing moderately, supported by incoming demand, while the Chinese market is growing at a moderate rate. The company called America "the world's largest cosmetics market" and added that its strong brands were Nars and Bare Minerals in the prestige color cosmetics category, while Sun Care skincare was the No. 1 position in department stores.

Skin care and sun protection market

A recent report from Grand View Research says that the skincare market size is expected to reach $196.67 billion by 2024. Such active development was influenced by the following factors: consumer demand for organic face creams, sunscreens and body lotions. The development of new organic skin care solutions is expected to drive growth in the market.

An equally important factor is the emergence and growth of e-commerce trading platforms. The increasing spread of e-commerce sites is expected to drive the market, especially for organic products. Niche vendors will be able to serve a broad consumer base.

Key industry players in the skin care category include Kao Corporation, Beiersdorf AG, L'Oréal SA, Avon Products Inc., Johnson & Johnson, Estee Lauder Companies Inc., Unilever PLC, Procter & Gamble Co., Colgate-Palmolive Company and Shiseido .

Natural raw material suppliers for organics are expected to dominate the value chain, offering exclusive ingredients as well as creating new products.

Technavio analysts believe that by 2020 the global skin care market will grow at an average annual rate of about 5%. There is currently a huge demand for skin lightening products in the market. Consumers are interested in this variety of cosmetic preparations because they reduce skin pigmentation and hide scars, hide acne and age spots. These products are also used to treat conditions such as melasma, hyperpigmentation, vitiligo and rosacea.

Forecast for the development of skin care cosmetics from 2016-2021

Sun protection products will significantly increase their presence in the market, facial skin care cosmetics will actively develop, depilation preparations and body and hand care products show slight growth.

Demand for skin lightening products is particularly strong in Asia Pacific, Africa and the Middle East due to traditional beliefs that fair skin tones are the mark of true beauty. Suppliers have also come up with skin care products that have UV absorbers to protect the skin from UV damage. The growing use of natural and organic ingredients in skin care products will increase the use of these cosmetics in the coming years.

Consumers are choosing products that do not contain chemically synthesized substances, which has prompted manufacturers to produce cosmetics containing ingredients derived from natural and organic sources. Manufacturers are introducing natural skin care products that are made with unique ingredients in order to appeal to consumers.

These goods are usually expensive and meet the needs of specific segments of society. For example, Rodial has released Bee Venom & Placenta 24 Carat Ultimate Crème, which moisturizes and counteracts aging with nanopeptides bound in 24 carat gold. The cream contains protein extracts from sheep placenta and bee venom, which helps to stimulate the formation of elastin and collagen in the skin and reduce wrinkles. Similarly, Bioactive Skincare Organic Snail Gel is formulated with snail mucus to treat skin inflammation.

Face creams account for about 70% of the total market share and are expected to continue their dominance for several years. Several varieties remain in demand at once: skin lightening, anti-aging and sunscreens, which are used to improve skin quality, rejuvenate cells, prevent wrinkles and brighten the skin. Given the growing number of working women around the world and the availability of beauty products online, this segment is expected to grow significantly in the coming years.

Asia-Pacific is the largest facial skincare sales region and will drive revenue growth and is expected to account for over 42% of the total market share. Much of the growth in this region can be attributed to strong demand for skin whitening creams, especially in countries such as India, China and Japan. The very dense population in the region, combined with the growing demand for personal care products among both men and women, will drive the market in the region over the next four years.

This market is highly competitive, with many manufacturers competing on the basis of differentiation, quality and pricing. In addition, the companies are expanding their business in emerging markets such as Central and South America and the Asia-Pacific region. Since the market is dominated by well-established players, the entry of new brands is limited. In addition, the market is expected to see a huge increase in strategic partnerships in the coming years.

Features of the development of the decorative cosmetics market in 2016

According to Future Market Insights, demand for color cosmetics around the world is starting to decline compared to 2015. There are several reasons for this:

– lack of quality. Decorative cosmetics available at retail outlets have been tainted with claims that make them chemically adulterated. Manufacturers experience certain difficulties in the manufacture of natural and organic cosmetics, since the purchase of such ingredients is associated with high costs.

– Low profitability. In terms of production costs, makeup products are expensive products. The ingredients or raw materials used to make color cosmetics are notoriously volatile. This confronts manufacturers with the problem of low profitability of such products.

– Limited shelf life. In order for decorative cosmetics to reach the final customer directly, a significant amount of time must pass. This, in turn, is associated with the obsolescence of products. Buyers are dissatisfied with the short shelf life of decorative cosmetics, which largely affects its sales.

In the Cosmetics Market 2016-2026 report, the global color cosmetics market is currently valued at nearly US$50 billion and is expected to show a 4.8% CAGR to reach US$79 billion by 2026. . In terms of consumption, the market will also show a slow CAGR of 3.3%, with global sales of just under 5,000 million units by the end of 2026. Over this ten-year forecast period, North America could become the dominant region, with a market value of US$20 billion by 2026.

In addition to North America, the Western Europe and Asia Pacific color cosmetics market, excluding Japan, will also make up a significant part of the global industry. In Latin America, Eastern Europe, the Middle East and Africa, makeup demand is forecast to rise as these regions are expected to post robust revenue growth above 5%.

The world market of decorative cosmetics in 2016. Source: Euromonitor

Based in different regions of the world, companies such as Kose Corporation, Amway Corporation, Mary Kay Cosmetics, Chanel SA, L "Oreal SA, LVMH, Estee Lauder Companies Inc., Revlon Inc., Shiseido Co., and Coty Inc. will be recognized key players in the global cosmetics market.

The report also notes that demand for premium color cosmetics will continue to grow, with the segment accounting for more than 60% of global revenue in 2017 and beyond. In 2016, more than half of global color cosmetics revenue came from sales of natural and organic products. In the coming years, the demand for natural cosmetics will continue to gain momentum, while the global demand for chemical makeup products will experience a significant decline. In terms of volume, the Chemicals segment was estimated to have a relatively high share of 55.4% in 2016, which is expected to decline to 50.1% by 2026 with a CAGR of 2.4%. The natural and organic segments are expected to have a relatively strong CAGR of 6.2% over the forecast period.

The market for organic cosmetics grew by 10%

North America has seen the highest demand for organic personal care and beauty products, particularly in the US. This is due to the higher awareness of the country's population about the benefits associated with organic beauty products. Europe is constantly showing a growing demand for organic personal care products and cosmetics. For example, Germany, France and the United Kingdom occupied a large part of the market back in 2015. The Asia-Pacific region is emerging as a promising market for organic facials worldwide. Currently, Japan and China account for the largest share of this regional market.

A report published by Allied Market Research on the organic cosmetics and beauty products market predicts that the global market will be worth $19.8 billion by 2022, demonstrating a CAGR of 10.2% over the period 2016-2022. Increasing interest in cosmetics and personal care, coupled with a growing awareness of health, are key drivers of growth in the organic personal care and beauty products market. North America was the largest market in 2016, accounting for roughly 35% of global revenue, followed by Europe. The Asia-Pacific region is estimated to have the highest CAGR of 11.1% over the period 2016-2022.

Government organizations in different countries are encouraging the use of organic ingredients instead of synthetic ones in cosmetic products, thus stimulating the growth of the market. Skin care, hair care and color cosmetics are most widely represented in the range of organic products, which together account for almost four-fifths of the global market. The largest manufacturers are investing in research and development to introduce innovative products.

At the same time, the most common distribution channels are mainly supermarkets, retail outlets, department stores, pharmacies, informal retail and concept stores. The retail channel received the largest income in the world market. However, due to the high penetration of the Internet around the world, combined with ease of accessibility and attractive discounts, consumers prefer to buy through online resources. This trend will ultimately boost online sales of organic personal care and beauty products over the forecast period.

The market for organic personal care and beauty products is expected to grow by 10.2% over the forecast period. The skincare segment will remain dominant in the market, accounting for almost a third of the market by 2022. The retail channel currently dominates the global organic personal care and beauty products market. However, online sales are forecast to post the fastest CAGR at 11.8%.

The North American region, which has the largest sales volumes, will continue to lead. The key players in the organic market are L "Occitane en Provence, L" Oreal International, Arbonne International, LLC, Burt's Bees, Estee Lauder Companies Inc., Amway Corporation, Oriflame Cosmetics S.A., Yves Rocher, Weleda and Aubrey Organics. These brands have adopted expansion and acquisition strategies to remain competitive in the global market.

The premium cosmetics market shows stable growth

The Euromonitor International report released in 2017 shows a strong growth of the beauty industry - by 5%. Notably, for the second year in a row, the premium segment outperformed consumer goods by almost 6%.

Growth in global sales of premium cosmetics in 2016. Source: Euromonitor

At the regional level, Brazil and Russia have regained their place among promising growth markets. While the economic situation has improved in Brazil, merchant owners have also resorted to measures such as modest innovations and promotional offers to keep demand intact. Meanwhile, local players have stepped up in Russia: Natura Siberica and Faberlic. As consumers shunned shopping destinations like Paris and London and spent less on retail travel, most of their cosmetics sales went to the Russian market. This dynamic helped Brazil and Russia achieve growth of 4.8% and 9.8%, respectively.

India and Indonesia continued to drive the market in 2016 with growth of 9.2% and 10.6%, while their market size almost doubled in 2011-2016 to reach US$12 billion and US$4.6 billion. respectively. Forecasts say a similar momentum will continue in the future as India is expected to suffer from currency demonetization in the short term, but experts say it will recover quickly as retailers facilitate cashless transactions.

With growth of 7.2%, 2016 was a stellar year for color cosmetics, further boosting growth from 6% in 2015. Dynamic brands have fueled the growth of the category, including Nyx, Urban Decay and Kiko Milano, as well as a host of niche brands such as Milk Makeup and Too Faced. Nyx and Kiko Milano have grown by expanding their retail network, supported by the use of digital technologies at the point of sale to improve the consumer experience.

Winning brands typically use digital platforms to communicate their message to consumers. For example, Glossier was born from a beauty blog using crowdsourced sources, while Milk Makeup's growth was driven in part by strong online presence as well as unique attributes such as its weightless brush-free makeup formula and its eco-awareness advocacy.

Sales of premium skin care products slowed slightly to 5%, mainly as a result of slower market growth in China. Other key categories, such as fragrances and hair care, posted stronger growth in 2016 compared to 2015, supported by improved earnings in emerging markets.

Market analyst forecasts indicate that in 2016-2021 sales of premium cosmetics and personal care products will steadily increase at an average annual growth rate of 3.6%, compared with 2.4% in the mass segment. In particular, China and the US will dominate the market over the forecast period, accounting for 54% of the total $20.3 billion in premium sales. At the same time, China expects to catch up with the US in terms of contribution to absolute profits, while maintaining the potential of the domestic market.

It should be noted that it is premium brands that bring the greatest profit to the global market, which becomes obvious when comparing the mass and premium segments. For example, the same premium color cosmetics are expected to grow by an average of 4.2% compared to 2016-2021 on a global scale. However, some categories of cosmetic products have every chance to compete for a leading position in the global market. This is especially true for hair care products, which are the second largest in terms of sales as the sales gap narrows.

While mass cosmetics and skincare remain stronger globally than the premium segment (with revenues of $6 billion and $12 billion respectively), the key regions of North America and Western Europe, by contrast, are showing more a promising way of development for the premium segment.

It is possible that mass-produced skincare and makeup products may experience the same as mass-market perfumes, which has declined in North America (-2.5% CAGR between 2016 and 2021), in while in Western Europe forecasts show a stable increase of no more than 0.1% per year over the same time. In these areas, it is premium products that currently dominate the perfume segment. At the same time, the rapid development of the premium sector of the beauty industry is pushing mass brands in the direction to survive in the market, as more and more consumers are looking for quality and effective products associated with premium formulations.

The Asia-Pacific region leads the way in forecasts for the expansion of the premium product sector over the period from 2016 to 2021, which, according to experts, will generate a profit of 6.6 billion US dollars. However, even this figure is slightly less than half of the income of mass segment products.

Such an active promotion of the premium segment is explained by large demographic dynamics, because more and more consumers in East Asia are interested in this particular category of cosmetics and personal care products. Premium products are becoming more and more affordable, thanks in large part to the fact that manufacturers have begun to produce products in small packages. In addition, some regional companies, such as AmorePacific, are gaining popularity in several Asian markets at once. For example, in Indonesia, Sulwhasoo's premium brand Sulwhasoo achieved sales of over US$11 million in 2016, although the brand was only introduced to the region in 2013, while in China this figure grew exponentially between 2011 and 2016 to reach 82 .5 million USD. The company has also launched the Hera luxury brand in Beijing's most prestigious department stores.

Market development forecasts for cosmetics and personal care products for 2016-2021.